Global shares, bonds gain as Fed fears fade; gold sinks

Fri Jun 28, 2013 9:07am EDT
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By Richard Hubbard

LONDON (Reuters) - World shares hit their highest level in a week on Friday and bonds and oil rose, as a volatile quarter drew to a close with fears of an early withdrawal of U.S. monetary stimulus waning.

Better economic data from Japan and efforts by China's central bank to ease credit concerns added to the positive tone, lifting MSCI's world equity index .MIWD00000PUS 0.5 percent and putting it on course to snap five weeks of losses.

U.S. stock index futures were higher as well, pointing to a firmer start on Wall Street where the benchmark S&P 500 index .SPX could see its first four-day gain since early April. .N

Market moves were likely to be limited, however, as investors avoid any large bets on the final trading day of the second quarter, and ponder the impact of an end to the era of cheap money which drove returns in the first half of 2013.

"It's been a tough quarter, the easy game is up and markets have to revaluate where they stand," said Wouter Sturkenboom, Investment Strategist at Russell Investments.

Global stock, bond and commodity markets have been highly volatile since Federal Reserve Chairman Ben Bernanke signaled last week that the U.S. central bank would soon cut the pace of its bond buying unless the economic recovery slows.

Two Fed policymakers came out on Thursday to reassure investors that any winding down of stimulus was still some way off, though its ultimate course was set. <FED/>

"The market is going to have to base its views about equities and currencies on actual economic growth rather than simply the fact that there's cheap money there," said Simon Derrick, chief currency strategist at Bank of New York Mellon.   Continued...

Electronic information boards display market information at the London Stock Exchange in the City of London January 2, 2013. REUTERS/Paul Hackett